### No. 80-463 IN THE SUPREME COURT OF THE STATE OF MONTANA 1981

MICHAEL L. REECE, Plaintiff andAppellant,

PIERCE FLOORING, aMontana Corporation, Defendant and Respondent.

Appeal from: District Court of the Thirteenth Judicial District, In and for the County of Yellowstone. Honorable Charles Luedke, Judgepresiding. Counsel ofRecord: ForAppellant: Charles E. Snyder,Billings, Montana For Respondent: 

### Crowley,Haughey,Hanson,Toole & 

### Dietrich,Billings,

Montana

Submitted on briefs: June 17, 1981 

### B)CT

## 131981 Decided: -. 

## QG7 J 

### Filed: -Mr. Chief ~ustice Frank I. Haswell delivered the Opinion of the Court.

In an action formalicious prosecution, the District Court of Yellowstone County granted a directed verdict in favor of defendantPierce Flooring atthe conclusion of plaintiff's case-in-chief

# . plaintiff Michael Reece appeals. Reece, a building contractorworking under the business

name 

### of M & R Enterprises, had been a customer of Pierce Flooring since 1972. On August 16

## , 1977, Reece owed Pierce Flooring $lr201.20 forcarpet installed at807 Saddle 

### rive and $1,372.80 forcarpeting installed at 134 Lantana Drive. Reece owed Pierce Flooring a 

### total of $2,744.56 on the two accounts, including interest. Before 

### Reece leftfor vacation on August 16, 1977, he 

### wrote a check 

### to Pierce Flooring and asked hismother to deliver 

### it for him. Intending topay only the amount owed on the Saddle Drive account but not recalling thatparticular amount, he 

### wrote outa blank check 

### to Pierce Flooring, noting as a memo "807 Saddle Drive." He then asked hismother to find out the amount owed on the Saddle Drive account, fillin thatamount on the check, and give it topierce Flooring. When Reece's mother went to Pierce Flooring, she talked to

an employee atthe front desk and asked how much 

### was owed on the Saddle Drive account. According to the testimony of Reece's mother, she 

### was then told that she would have to pay the entire amount forboth the Saddle Drive and the Lantana Drive accounts

or else Pierce Flooring would place liens on these properties. Concerned about the possible liens, Reece's mother made the check out for $2,744.56 the entireamount owed on both accounts to Pierce Flooring rather thanjust the amount owed on the Saddle Drive account. The check

### was returned for insufficient funds. Reece's mother told her son about the circumstances surrounding her deli-veryof the check when he returned from vacation inearly September. He knew that the check had not cleared when he received hisbank statement inmid-September

# . From mid-September tohis 

### arrest on November 27, 1977, Reece made no further contact with Pierce Flooring and took no action to pay his account. On September 12, 1977, Pierce Flooring filed liens on both the Saddle Drive and the Lantana Drive properties. In early October the check 

### was run through a second 

### time and returned again for insufficient funds. Pierce Flooring made several attempts to contact 

### Reece but failed. Reecelsbusiness phone 

### was disconnected inmid-October and hishome phone 

### was unlisted. Pierce Flooring then mailed 

### to Reecels home address a certified 

### letter notifying Reece that criminal prosecution may be initiated by Pierce Flooring if the check

### was not made good within five days, as provided in section 45-6-316, MCA. The registered 

### letter 

### was returned to Pierce Flooring marked "refused." Reece testified that he had not received the registered 

### letter sincehe did not receive hismail athishouse addressbut athispost office box. On October 25, Ron Pierce, general manager of Pierce Flooring, signed an "~nvestigative Form for Bad Checks and Forgeries" which 

### was the standard form used by the Yellowstone County attorney's office 

### to decide whether 

### or not to prosecute a bad check charge. One question asked whether the check 

### was given inpayment for an existingdebt, to which Pierce Flooring replied "yes." The deputy county attorneywho subsequentlydecided to prosecute the 

### case, testified at the trial thathe would have rejected and probably did reject the case atthat timebecause of the affirmative answer to the existing debt question. Nevertheless, onNovember 1, a complaint

### was filed in the Justice Court of Yellowstone County on the charge of issuing a bad check (felony)inthatMichael Reece "with the purpose 

### to secure property, 

### to 

### wit: lienwaivers on 

### real 

### estate andfixtures" issued the check. The record 

### is unclear 

### as to how the deputy county attorney

### came 

### to the belief that lienwaivers had been given inexchange for fullpayment. The deputy county attorneytestified that such information could have 

### come from either 

### lawenforcement personnel orfrom an employee of pierce Flooring, but he could not remember why he thought lienwaivers had been given 

### to Reece. On Sunday, November 27, 1977, Reece 

### was arrested inhis home. He 

### was booked and kept in theYellowstone County jail untilhe arranged bailof $2,800. On December 1, 1977, the complaint 

### was dismissed by the deputy county attorney on the grounds that new evidence indicated that it 

### was not in the interestof justice to prosecute. Thereafter Reece filed a civilaction formalicious prosecution againstPierce Flooring. It 

### came on for trial on October 6, 1980. Atthe conclusion of plaintiff's case-in-chief the District Court granted Pierce Flooring's motion for a directed verdict as follows: "THE COURT: Allright. Well, gentlemen, on the authority that's been cited to 

### me, that the question of lackof probable cause is a question of 

### lawtobe determined by the Court--and that specifically

### is Wendel vs. Metropolitan Life Insurance Company, 83Montana 252--I think the Court is compelled 

### to grant the motion and dismiss the complaint in thiscause, and it is SO ordered." Plaintiff Reece appealspresenting essentially

### two issues forreview: (1) Is probable cause a question of 

### law

### to be determined by the Court? (2) If not, is the evidence sufficientto create a jury issue on probable cause? In a civilaction formalicious prosecution, the plaintiff must allege and prove (1)thata judicial proceeding was commenced and prosecuted againsthim, (2)thatthe defendant 

### was responsible for ins tigating

## ,prosecuting orcontinuing suchproceeding, (3)thatthere

### was lackof probable cause 

### for defendant's 

### acts, (4)thatdefendant

### was actuated by

### malice, (5) that thejudicial proceeding terminated favorably forplaintiff, and (6) thatplaintiff suffered damage and the amount thereof. McGuire v. Armitage (1979)

## , Mon

### t

# . I 603 P.2d 253, 36 St.Rep. 2142; Stephens v. Conley (1914), 48 Mont. 352, 138 P. 189. The issues in this appeal concern the third element listed above. In this

### case the District Court ruled that lack of probable cause 

### was a question of law 

### to be determined by the court

on the basis of our 1928opinion inWendel v. MetropolitanLife Insurance Co., 83Mont. 252, 272 P. 245. This

### was error. We acknowledge the existenceof an isolated general 

### statement inWendel to thateffect: "Therefore, inactions formalicious prosecutions, the 

### real controversy 

### is, generally, upon the question of 

### malice and want of probable cause. The burden of proving these essentialelements 

### rests upon the plaintiff, and whether there 

### was 

### a want of probable cause is purely a question of law." Wendel involved 

### a maliciousprosecution action by a discharged employee against hisformer employer following dismissal of a larcenyprosecution instigated by hisformer employer. A jury verdict in favor of the discharged employee 

### was reversed on appeal on the ground that the uncontroverted facts established probable cause 

### as a 

### matter of law. In that context where the factsof the larceny

### were undisputed and the criminal charge 

### was dismissed for failureof the 

### state 

### to diligentlyprosecute the 

### same, the question 

### of probable cause became a question of 

### law for the court. We expresslydisapprove the applicationof thisrule generallyto actions formalicious prosecution holding the rule properly applicable onlywhere there is no conflict in the evidence on the issue of probable cause and such uncontroverted evidence admits of onlyone conclusion on that issue. The cases of Orser v. Stateof Montana (1978), 178Mont.126, 582 P.2d 1227, and 3-D Lumber Co. v. Belgrade State~ank (1971), 157Mont. 481, 487 P.2d 1136, 

### are similar to Wendel. In both 

### cases the evidence relating to the presence 

### or absence of probable cause 

### was undisputed and admitted of onlyone conclusion. Under such circumstances the issue of probable cause became a question of lawfor the court. Any applicationof that principle to

### cases involving conflicting evidence on the issue of probable cause is expresslydisapproved. Puutio v. Roman (1926),76 Mont. 105, 245 P. 523 expresses the correct rule inmalicious prosecution 

### cases. There this Court reversed a directed verdict for the defendant setting forth the applicable 

### law inthislanguage: "It is settled in thisjurisdiction, and elsewhere generally, that 

### a cause should never be withdrawn from the jury, unless the conclusionnecessarily follows, as a 

### matter of 

### law, that a recovery cannot be had upon any view which can reasonablybe taken of the factswhich the evidence tends to establish. A motion for a directed verdict in favor of the defendant 

### is in effect a demurrer 

### to the plaintiff's evidence; it admits as true 

### allmaterial facts inevidence which tend to establishplaintiff's cause of action, whether such factsbe produced by the plaintiff 

### or the defendant. Such facts, with everylegitimate inference thatmay be drawn from them, are to be considered in the light 

### most favorable to the plaintiff. The fact that the testimony inbehalf of the defense pleaded 

### is uncontradicted 

### willnot justify a directed verdict in favor of the defendant, if the inferences 

### to be drawn from it areopen 

### to different conclusions by reasonable men

# ." (Citationsomitted.) The distinction between the judge and jury function 

### was recently succinctlyexpressed by the Georgia Court of Appeals inthismanner: "Want of probable cause is an essential element of a malicious prosecution cause of action. Ordinarily, the existence of probable cause is a question of fact forjury determination. Only where the material factsare not indispute, or when onlyreasonable inference can be drawn from the evidence, does the existenceof probable cause become an issue of 

### lawfor the court 

### to resolve." Kviten v. Nash (1979), 150Ga.App. 

### 589, 258 S.E.2d 271. We hold, therefore, that a directed verdict in a maliciousprosecution action 

### is errorwhere the evidence, including 

### reasonable inferences, is susceptible to differentconclusions by reasonable men when viewed in the light

### most favorable to the partyopposing the directed verdict. We furtherhold that under such circumstances the issue of probable cause must be submitted 

### to the jury fordeterminationand not be decided by the court 

### as

a 

### matter of 

### law. We now examine the evidence in the light

### most favorable 

### to the plaintiff to determine if the evidence 

### is sufficient

### to establish

### a jury issue on probable cause. Probable cause means "reasonable grounds for suspicion, supported by circumstances reasonably strong inthemselves to warrant a reasonably prudent and cautiousman inthe belief that the accused 

### is guiltyof the offensewith which he is charged." Cornner v. Hamilton (1922), 62 Mont. 239, 204 P. 489, quoted with approval inOrser v. Stateof Montana, supra. Moreover, since an action formalicious prosecutionruns counter 

### to important legal and 

### social policies, such 

### as encouraging criminal proceedings against those who appear guilty of a 

### crime, it is not favored by the 

### lawand the burden on the plaintiff is heavy. Wendel, supra; Orser, supra. The undisputed evidence indicates thatplaintiff Reece was charged on the basisof 

### a report signed by pierce who instigated the criminal proceeding. There 

### was no fulldisclosure of the facts surrounding the check to the prosecutor then 

### or thereafter. Pierce did not disclose the following facts: (1)thatReesets mother passed the check to Pierce Flooring in the increased amount afterbeing advised that lienswould be filed againstboth properties if the check

### were not made out for the fullamount, (2) thatliens had been filed against both properties, (3)thatthe report 

### was turned over to the police department afterPierce determined that

### Reece 

### was not going 

### to come inand work out something on the check. Additionally an employee of Pierce Flooring testified bydeposition that she kept Pierce informed of anything on the case that came 

### to her attention and disputed many of Pierce's statements indicating his lackof knowledge on developments concerning theprogress of prosecution in the case. The basis of the 

### criminal charges against Reece 

### was that the checkwas given to

secure lienwaivers from pierce on the two properties. When the prosecutor contacted Pierce Flooring for copies of the lien waivers, thisemployee did not 

### tell him there

### were no lien waivers but instead 

### wrote him a

### memo stating: "Ican9 

### t find a copy of the lienwaiver. The girl thatwas here before 

### me would not always take copies of the lienwaivers." Thismemorandum was dated November 4, 1977, 

### almost two months afterlienshad been filedby pierce Flooring againstboth properties. We hold that the foregoing evidence is sufficient to present a jury issue on the presence 

### or absence of probable cause for the prosecution againstplaintiff Reece

# . The 

### total evidence presents a basis for differing conclusions concerning whether P i e r c e F l o o r i n g 9 s a c t i o n s 

### were those thatwould warrant a reasonably cautiousand prudent man to believe thatReece was guilty of the offense of which he was charged; whether the facts surrounding the issuance and deliveryof the check 

### were fairly presented to law enforcement officers; whether the charge 

### was filed 

### to collect a preexisting debt with nothing of value given toReece; and whether Pierce Flooring fabricated facts 

### to motivate criminal proceedings against Reece. These are issues for determination by a jury, not questions of law 

### to be decided by the Court. We express no opinion concerning the ultimate determination of these issues, onlythat they 

### are properly to be resolved by a jury. The directed verdict and judgment arevacated. This cause is remanded to the District Court for a new trial.Chief 

### ~ustice

We 

### concur:

### Mr. Justice Gene B. 

### Daly dissenting: I respectfully dissent. The majority here has allowed themselves the luxury of becoming involved in a morass of Red Herrings about lien waivers, etc., and uncontroverted evidence, and has totally disregarded the authority that pertains when a citizen proceeds through the county attorney rather than directly, i.e., a justice court complaint. On October 25, 

### 1977, Ron Pierce, general manager of Pierce Flooring, signed an "Investigative Form for Bad Checks and Forgeries," the standard form used by the Yellowstone County Attorney's office to decide whether to prosecute a bad check charge. The form was filled out 

## ----- properly, including 

## --

one question 

### - which asked whether the check was given in payment for an existinq 

### -- debt, to which 

## ---- Pierce Floorinq replied "yes." The deputy county attorney who subsequently decided to prosecute the case testified

## - at the trial that he would have rejected, and probably did 

## ------- 

## - -- --- reject the case, at

### - that time because of the affirmative 

### -- answer to the existinq debt question. Nevertheless, onNovember 1, a complaintwas filed in the Justice Court of Yellowstone County on the charge of issuing a bad check (felony) in that Michael Reece "with the purpose to secure property, to wit: lien waivers on real estate and fixtures" issued the check. The record is unclear

as to how the deputy county attorney came to the belief that lienwaivers had been qiven in exchange for full~9ment. The deputy 

## ----

county

## - attorney testified that such information could have come from either law 

### ---- enforcement personnel

### -- or from an em~loyee of Pierce Flooring, but he could not 

## ----------

## -- ------------------ 

## ---remember why he thouqht lienwaivers had been given to 

## --- 

## -- - -----------

## ------- Reece. The county attorney's office received a note from Pierce Flooring on November 8, 1977, stating that copies of

a lien waiver could not be found. The deputy county attorneywho swore out the affidavit in support of the 

## ------- ----------- 

## - -- - complaint againstReece testified that had he not been

## -- so busy, hewould have dismissed the case atthat timeor would have confirmed that lienwaivers could not be found and then would have dismissed the case. On Sunday, November 27, 1977, Reece was arrested in his home. He was booked and kept in the Yellowstone County jail untilhe arranged bail of $2,800. On December 1, 1977, the complaint was dismissed by the deputy county attorney on the grounds that new evidence indicated that it was not in the interestof justice toprosecute. Reece presents essentially one issue for review: Whether the District Court erred by granting Pierce Flooring's motion for directed verdict on the grounds that Reece failed to show want of probable cause on the part of Pierce Flooring. Reece argues that the question of want of probable

cause should not have been decided by the District Court as

a matter of lawbecause the record contains sufficientproof of probable cause to submit this issue to the jury. He argues specifically that when the evidence he presented is viewed in itsmost favorable light it shows: 1. Pierce Flooring's actions were not those of a prudent, cautious and reasonable man; 2. All facts surrounding the check were not fairlyand fullyrepresented to the law enforcement officers; 3. The charge was filed to collect a preexisting debt and nothing of value was given toReece; 4. Pierce Flooring failed tomake sufficient inquiry into the circumstances under which the check was issued; and 5. Pierce Flooring intentionally misled the law enforcement officer and fabricated facts to motivate criminal proceedings against Reece. It is true that upon a motion for a directed verdict by a party, the evidence introduced by the opposing party must be viewed in its most favorable light. See Sistock v. Northwestern Telephone Systems, Inc. (1980), Mont.



### , 615 P.2d 176, 178, 37 St.Rep. 1247, 1249, and cases cited therein. Nevertheless, such a rule does not mean that this Court can make numerous factual inferences which are not supported by the record. Considering the evidence in the light most favorable to Reece, I cannot say that the DistrictCourt erred in 

### its verdict. Further, it is a well-settled rule in this statethat it is the function of the court to determine whether probable cause existsin a malicious prosecution case; it is

a question of law to be determined by the court. Orser v. State (1978), 178 Mont. 126, 582 P.2d 1227; 3-D Lumber Co.

v. Belgrade State Bank (1971), 157 Mont. 481, 488-489, 487 P.2d 1136, 1140; Wendel v. Metropolitan Life Ins. Co. (1928), 83 Mont. 252, 263, 272 P. 245, 249. The District Court was therefore acting within its prerogative to decide this case on a directed verdict, as a matter of law, if the record supports its conclusion that Reece failed topresent his prima

### --- facie case of malicious prosecution and, inparticular, that Reece failed to show that Pierce Flooring acted without probable cause by going to the Yellowstone County Attorney and filling out an information sheet on bad checks

# . There is no question that want of probable cause is the gistof an action for malicious prosecution. McGuire v. Armitage (1979), Mont. 

## , 603 P.2d 253, 36 St.Rep. 2142; Wilson v. Gehring (1968), 152Mont. 221, 448 P.2d 678; Fauver v. Wilkoske (1949), 123 Mont. 228, 211 P.2d 420; Cornner v. Hamilton (1922), 62 Mont. 239, 204 P. 489. Probable cause means "reasonable ground for suspicion, supported by circumstances sufficiently strong in themselves to warrant a reasonably prudent and cautious man in the belief that the accused is guilty of the offense with which he is charged." Cornner, 62 Mont. at243, 204 P. at491, as quoted inOrser, 178Mont. at 137, 582 P.2d at1233. Moreover, since an action for malicious prosecution runs counter to important legal and social policies, such as encouraging criminal proceedings against those who appear guilty of a crime, it is not favored by the law and the burden on the plaintiff is heavy. SeeWendel, 83 Mont. at262-263, 272 P. at248; accord, Orser, 178Mont. at 135, 582 P.2d at 1232. Reece, therefore, had a heavy burden to show that Pierce Flooring acted without probable cause, and clearlyhe cannot meet that heavy burden by arguing only tenuous inferences. Although theremay be some question asto a fulldisclosure of allof the facts surrounding the issuance of the check, it is clear from the record thatPierceFlooring was relying 

## -

upon the decisionsmade atthe county attorney's 

## ----

### office concerniny what information was important and what 

## --- ----. 

### ------ information was not important. Pierce Flooring truthfully 

## ------- and accurately filled out the county attorney's information 

### --- sheet onwhich the decision to prosecute was based. Any confusion over the existence of lien waivers was eradicated on November 8, when the county attorney's office received the note from Pierce Flooring tnat there was no record of any lien waivers. From November 8, 1977 to November 27, when Reece was arrested, according to the testimony of the deputy county attorney in charge of the case, there was sufficient disclosure of information by Pierce Flooring to warrant dismissal of the case. As this Court noted in Halladay v. State Bank of Fairfield et al. (1923), 66 

### Mont. 111, 117-118, 212 P. 861, 

# ".

. .The rule is that,where the prosecutinq officer starts 

### --a criminalproceedinq upon a full and fair statement

## of the facts from the accuser, he acts for the state; and so he 

## --------- 

## --- doeswhen he proceeds

## - upon

### -- his own personal 

## - knowledqe 

# . . .

"Generally, itmay be said that a prosecuting officer is charged with the duty of determining when to commence a particular prosecution, and when to discontinue it. He stands upon a different footinq

## --- from a defendant, who goes to aTurnofthe peace, swears 

## - - -- out a warrant, 

### -------- and directs the prosecutinq officer

## - to see to its execution. The county attorney in this state, not only directs 

## ------------- -------- under what conditions a criminal action shall be commenced, but from the time it begins 

### ----- 

## --- until it endshis supervision and control is 

## ------ complete, limited only by such 

## - restrictions as the law imposes. 

# . . ".

. . If, therefore, a prosecuting officer incorrectly determines that certain facts given to him constitute a crime and proceeds to set on foot necessary action, 

### - the

### informant is not liable,because the fault is not his, but that of the officer. 

# . 

# ." B 

## ---- (Emphasissupplied.) In light of Pierce Flooring's reliance on the expertise of the county attorney's office in terms of what information was important and what was not, it cannot be said that Pierce Flooring was not acting prudently and cautiously and without probable cause. I would affirm the District Court's directed verdict for Pierce Flooring.

Justice